Private employers added fewer jobs than expected last month in the United States, a survey said on Wednesday, underscoring the economy's continued struggle to recover from mass layoffs caused by the Covid-19 pandemic.

Payroll services firm ADP reported private employment rose by 117,000 in February, less than analysts had expected and a potentially worrying sign for the government's employment report for the month, which is due out later in the week.

The service sector, which has struggled to cope with restrictions intended to stop Covid-19 from spreading, accounted for all of the hiring gains, while the goods-produce sector actually saw employment decline by 14,000, fueled by layoffs in manufacturing.

"The labor market remains far from complete recovery but job growth in continuing. The pace will pick up as more and more people are vaccinated and the economy moves closer to a fuller reopening," Rubeela Farooqi of High Frequency Economics said.

The US service sector saw employment grow in February, but the goods-producing sector lost jobs, according to ADP data
The US service sector saw employment grow in February, but the goods-producing sector lost jobs, according to ADP data AFP / JOSH EDELSON

Midsized firms with between 50 and 499 employees saw the most new positions added with 57,000, while small- and large-sized firms both added around 30,000.

Among service sectors, trade, transportation and utilities added the most jobs, followed by education and health, and then leisure and hospitality, which has been particularly hard-hit during the pandemic.

The ADP report is seen as a preview of the Labor Department's monthly employment data set for release on Friday, which will take into account both public and private sector employment.

Total payrolls rose by only 43,000 in January, while the unemployment rate dropped to 6.3 percent. Analysts forecast stronger payroll growth of 200,000 in February, while the unemployment rate remains the same.

Coronavirus